The Chinese leadership recently adopted a "strategy of strengthening China through human capital" with the goal of enhancing the country's international competitiveness in higher education. Largely because of new policy incentives implemented by the government, China has witnessed a tidal wave of foreign-educated Chinese returning to their native country since 2000. A quarter-century-long effort to train China's best and brightest overseas now seems to have come to fruition. These new developments, however, may also intensify political tensions between coastal and inland regions within the country and between foreign-educated and locally educated elites. China's well-funded universities, where foreign-educated returnees already predominate, are disproportionately located in a few coastal cities. This increasingly uneven distribution of human capital presents a major challenge for the Chinese leadership as it strives to achieve more-balanced regional development.

For observers of People's Liberation Army (PLA) politics and civilian-military relations, annual sessions of China's parliament—the National People's Congress (NPC)—are interesting for three main reasons. First, the session reviews the government's annual budget, which includes official figures for defense spending. These figures, with significant caveats, indicate the pace and scope of military modernization—as well as the relative political weight of the PLA. Second, roughly one-tenth of all delegates to the NPC are active-duty military officers, and their discussions (often complaints) in plenary sessions are useful markers of intramilitary concerns. Third, the NPC often passes military-related regulations, which sometimes reveal institutional or doctrinal trends in the armed forces. From that perspective, the second session of the 10th NPC in March 2004 is notable for restoring double-digit increases in the defense budget and for giving new guidance on military modernization and management of the army. Also notable was the absence of any visible civil-military split like the "two centers" debate from the NPC in March 2003.

On April 26, 2004, the Standing Committee of the Politburo agreed to strengthen contractionary macroeconomic policies dramatically and to apply administrative controls over investment and land use. Within days, the State Development and Reform Commission (SDRC)—the former State Planning Commission—issued an urgent directive ordering the suspension and reinspection of thousands of investment projects. These steps represent a dramatic reorientation of Chinese macroeconomic policy. They have a significant political impact, bringing new leaders into the core of the economic decision-making process and shifting economic policy in a conservative direction. If not an outright step backward, these measures also indicate that economic policy approaches in place through the first year of the administration of Premier Wen Jiabao have failed to achieve their objectives. This piece describes the most important policy measures instituted; traces these measures' political implications, and assesses their economic implications.

Attention in PRC media to the activities of the Chinese Communist Party (CCP) Politburo in the 18 months since the 16th Party Congress has illuminated aspects of that body's operating procedures and its members' roles. In particular, recent media reporting has further clarified the Politburo's meeting schedule and agenda, as well as the division of responsibilities for policy supervision among its membership. There have also been rare glimpses of the "leadership small groups"—the informal task forces that coordinate implementation of Politburo decisions throughout the party, state, and other hierarchies in China's political order. A previous article in China Leadership Monitor (issue 9, winter 2004) assessed aspects of the Politburo's schedule in the context of broader party procedural reforms inaugurated under Hu Jintao's leadership. This article complements and extends that analysis.

It has been more than fifteen years since the People's Liberation Army crushed the prodemocracy rallies in Tiananmen Square in Beijing, killing hundreds of students and workers and wounding thousands more. Since then, although stifling political dissent, China has continued to liberalize its economy and is rapidly becoming an economic superpower. Will the explosion of new wealth in China lead to new pressures for democratic reform? And just what is the legacy of Tiananmen? Peter Robinson speaks with William McGurn and Orville Schell.

In the fall of 2003, Taiwan President Chen Shui-bian put forward a series of controversial proposals, including calls for referenda on various sensitive issues and reform of the 1947 constitution. This program sent immediate shock waves through the Taiwan presidential election campaign and roiled the policy establishments in Beijing and Washington. On the Chinese side, strongly worded condemnations of Chen's behavior came almost exclusively from civilian government and party channels, while senior military officials and the military propaganda apparatus were notably silent. The relative silence of authoritative military statements, complemented by the lack of evidence in open sources of troop movements, exercises, or other escalatory behavior, signals important changes in strategy and tactics with respect to Taiwan. This new posture contrasts starkly with the 1995–96 and even 2000 crises, when People's Liberation Army (PLA) voices were among the most aggressive and threatening. This subtler, nuanced strategy tracks with broader evidence of China's "new diplomacy" in the region, which seeks to achieve security goals with a more indirect approach. It is also consistent with Chinese strategy since the 2000 presidential election that has emphasized the twin pillars of economic inducement and a united front with the opposition while avoiding public displays of military coercion in favor of the quiet, serious preparation of military hedging options.

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